MFD Best Practice / Toolkits

Commission and disclosure

This guidance sets out the FLA’s best understanding of how the FCA’s rules on commission and disclosure, which came into force on 28^th January 2021, work in practical terms in the specific context of the motor finance market. The guidance document has been produced in partnership with members of the MFD Management Committee and FLA / NFDA Liaison Group and through liaising directly with the FCA.  The final guidance has been shared with the regulator.  To view please click here.

Intermediary Oversight

The Policy Group and MFD Management Committee has agreed non-binding guidance that describes the importance of effective intermediary oversight, and provides a framework by which firms may include additional elements of oversight where necessary. As well as describing the legal and regulatory requirements lenders and intermediaries must meet, this guidance also outlines steps lenders may wish to take when appointing intermediaries and defining contractual arrangements. To view the guidance please click here.

Standard for financial crime prevention

The FLA standard, agreed by the Motor Finance Fraud Group, sets out the due diligence requirements members of the FLA’s Motor Finance Division must undertake when onboarding customers.  This includes the acceptable methods for identifying customers and verifying their identity through each type of sales channel. To view the standard please click here.

Supplier due diligence

The FLA’s best practice on conducting supplier due diligence, agreed by the FLA Motor Finance Fraud Group, provides a guide on checks that can be undertaken by members to ensure the intermediaries they are transacting with are legitimate businesses and not fraudsters.  To view the best practice please click here.

Due diligence and fraud prevention through non-face-to-face sales channels

This best practice, agreed by the FLA’s Motor Finance Fraud Group, sets out some key considerations for identifying and verifying customers and preventing fraud where non-face-to-face sales channels are being used to onboard customers.   The guidance has been produced to react to the growing use and demand of click and collect and delivery services operated by dealers – particularly over the Covid-19 pandemic.  To view the guidance please click here.

Knowledge Based Authentication (KBA)

The Motor Finance Fraud Group have agreed best practice which sets out a series of considerations for members that have implemented, or are considering implementing, KBA questions as part of their sales process.  We recommend that members review their KBA questions in line with the guidance to ensure the KBA product prevents fraud without causing disproportionate difficulties for legitimate customers.  To view please click here.

Managing third party risk

This best practice provides a framework for managing risks associated with third party firms supplying services to members.  It provides the rules and regulations set out by the FCA and the GDPR relating to operational risk and data security, the key risks members should be aware of when outsourcing or procuring services from third party firms and considerations that should be made at each stage of the relationship.  Members of all of the FLA’s financial crime and fraud groups and the Compliance Forum were consulted on to produce the guidance.  To view please click here.

Detecting and reporting vehicle mileage fraud

The FLA’s best practice on detecting and reporting vehicle mileage fraud sets out the UK legal position on clocking, prevention initiatives in the EU and the tools and processes available to members for detecting and reporting vehicle mileage fraud.   The best practice was agreed by the FLA’s Motor Finance Fraud Group.  To view please click here.

Prevention of vehicle sub-hire

Agreed by the Motor Finance Fraud Group, this FLA Best Practice sets out various ways members can identify, prevent and respond to cases where their customers sub-hire vehicles to third parties, against the terms and conditions of the agreement.  To view please click here.

Accepting credit and debit card repayments

Agreed by the Motor Finance Fraud Group, the FLA’s best practice on accepting credit and debit card repayments outlines the controls that members should consider implementing to prevent risk of money laundering and fraud where their customers and third parties seek to make a card payment.  The document also covers the chargeback process and tools available to motor finance providers to help protect their assets where there is evidence of payment fraud.  To view the best practice please click here

Improving customer information at point of sale and during the contract

The FLA’s Policy Group and MFD Management Committee has agreed guidance aimed at improving the information provided to customers on motor finance agreements in two ways – at the point of sale through the provision of summary information, and during the contract.  To view the guidance please click here.

Assessing creditworthiness and affordability

The Policy Group and MFD Management Committee has agreed non-binding guidance that sets out what assessment of a customer’s creditworthiness, and their ability to afford the credit, should be made prior to the conclusion of the agreement.  The guidance is in line with new FCA rules for assessing creditworthiness in consumer credit PS18/19 published in July 2018.  To view the guidance please click here.

Funding negative equity in motor finance 

The Policy Group and MFD Management Committee has agreed non-binding guidance that sets out how firms may wish to approach negative equity solutions in motor finance in relation to hire purchase agreements, and in particular PCP types of agreement. To view the guidance please click here.

Forbearance management

The FLA Secretariat, with assistance from full members of the Policy Group and associate members, has produced guidance on motor finance forbearance.  The guidance draws upon the FCA’s final notice issued to Moneybarn and FCA rules, setting out a best practice approach for the provision and management of forbearance and outlining some key considerations on how the cost of termination options should be provided in writing to customers.  To view the best practice please click here.

Consumer Rights Act

The FLA has worked with the National Franchised Dealers Association (NFDA) and their members to agree non-binding industry best practice on responding to Consumer Rights Act (CRA) complaints from customers where the vehicle is financed.  The guidance sets out the key provisions of the CRA, the rights of consumers and the options NFDA and FLA members have in order to effectively respond to complaints.  To view the best practice please click here.

CMC complaints

The FLA Secretariat, with assistance from the Policy Group and associate member law firms, has produced guidance on how to defend complaints facilitated by Claims Management Companies (CMCs).   The guidance considers various court cases which CMCs have referred to in order to progress complaints with the FOS and the courts. To view please click here.

Industry standards

The FLA has produced vehicle recovery and collection industry standards, agreed by members of the Vehicle Recovery and Collection Group. The standards provide comprehensive guidelines that all FLA member vehicle recovery and collection agents are expected to meet, as well as setting out some key provisions for lender members and their communication with agents.  To view please click here.

Conducting vehicle repossessions during the COVID-19 pandemic

This Best Practice has been produced in collaboration with members of the Vehicle Recovery and Collection Group.  It sets out the approach that should be taken to repossessing vehicles relating to agreements that had been terminated prior to the impact of COVID-19, due to financial difficulties that are not linked to the pandemic or exceptional circumstances where repossession from customers impacted by the Coronavirus is permitted to proceed.  To view the guidance please click here.

Re-registration of vehicles that were illegally exported

The FLA has worked with the DVLA to produce guidance on how members can ensure that vehicles they have brought back to the UK, following illegal export, can be re-registered to be driven on UK roads. To view please click here.

Asset registration

Agreed by the Asset Data and Registration Group, the FLA Best Practice on Asset Registration outlines the approach members should take to effectively register and protect their secured financial interests with each of the Motor Asset Registration Services (MARS) members Auto Trader, cap hpi, CDL, Experian Automotive.   To view the best practice please click here.

Settlement payments in dual financing cases

The Asset Data and Registration Group have established an agreed industry approach that members take in situations whereby motor retailers fail to settle outstanding finance with one member only to then sell the vehicle on again using finance provided by another FLA member.   To view the best practice please click here.

Conducting vehicle repossessions during the COVID-19 pandemic

This Best Practice has been produced in collaboration with members of the Vehicle Recovery and Collection Group.  It sets out the approach that should be taken to repossessing vehicles relating to agreements that had been terminated prior to the impact of COVID-19, due to financial difficulties that are not linked to the pandemic or exceptional circumstances where repossession from customers impacted by the Coronavirus is permitted to proceed.  To view the guidance please click here.

COVID-19 guidance for vehicle collection, delivery, distribution, storage and technical services

This guidance has been produced in collaboration with FLA members and other trade bodies, setting out the approach businesses should take during the COVID-19 crisis period in line with Government guidelines.  To view please click here.